Viðhaldsmargin

Viðhaldsmargin is an Icelandic term that translates to "maintenance margin" in English. It is a concept primarily used in the financial industry, particularly in relation to margin trading. When an investor buys securities on margin, they are borrowing money from their broker to purchase more assets than they could afford with their own capital. The initial amount of money the investor puts down is called the "initial margin."

The maintenance margin is the minimum amount of equity an investor must maintain in their margin account. Equity is the value of the securities in the account minus the amount borrowed from the broker. If the value of the securities in the account falls, and the investor's equity drops below the maintenance margin requirement, the broker will issue a "margin call."

A margin call is a demand from the broker for the investor to deposit additional funds or securities into their account to bring the equity back up to the required maintenance margin level. If the investor fails to meet the margin call, the broker has the right to sell the securities in the account without the investor's consent to cover the shortfall. The specific maintenance margin percentage is set by the broker and can vary. This mechanism is designed to protect both the investor from accumulating excessive debt and the broker from potential losses.